The Unix workstation market has and will likely remain relatively flat, said Larry Anderson, marketing manager for the company's Unix workstation division. Hewlett-Packard (HP) has seen its sales increase, however, because it's been able to cannibalize sales from other vendors such as Silicon Graphics.

The main companies in the field are now Sun and HP, he said, which means that the two companies invariably will be competing head-on, often over price.

HP hopes to maintain a price advantage by leveraging the economies of scale
afforded by its growing Windows NT-based workstation division, said Anderson.
HP uses the same monitors and keyboards for its Unix and NT workstations.
Research, development, and marketing functions for both workstation platforms were also combined earlier this year.

In the end, the higher total volume of workstations produced by HP should
give it a cost advantage, he said. Today's price cuts are in fact a result of these consolidation efforts.

"This sets the table for dramatic price reductions," he said. "The idea is to reprice some of these high-nd systems to the middle of the market."

For its part, Sun released in January two new low-cost workstations, which
the company sells directly to consumers.

HP's price cuts vary by the configuration of the workstation, but in general
they are fairly substantial. The J2240 workstation, which is one of HP's premier Unix workstations, dropped 37 percent to $35,480 from $55,900, Anderson said. C-class workstations, which run HP's PA-RISC processors at speeds in the 200-MHz range, received similar price cuts. C-class workstations can now be had for $22,000.

On the lower end, HP dropped the price of its B class workstations 23 to 30
percent. The B class workstations use HP's PA-RISC processors running at
180 MHz and less. For example, the B180EG drops to $10,800. B-class workstations running 132-MHz PA-RISC processors can be obtained for less than $5,000.

HP will release another generation of workstations in early 1999 that run
the PA-RISC 8500 processor, which will be coming out at that time. Later in
1999, HP will release workstations running the 64-bit Merced processor from
Intel.